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Friday, October 31, 2008

Malaysians reducing purchases, Americans and Japanese too

by YEOW POOI LING

KUALA LUMPUR: More than half of Malaysians have reduced “impulse” purchases and postponed major life decisions, reports StarBiz's Yeow Pooi Ling.

The AP meanwhile reported from Washington that scared and out of money, Americans stopped buying everything from cars to corn flakes in the July-September quarter, ratcheting back spending by the largest amount in 28 years and jolting the national economy into what could be the most painful recession in decades.

Yeow Pooi Ling reports that Malaysians are delaying getting married, having children, moving house, changing jobs or furthering their education due to the current downbeat economic conditions, according to a recent poll by Synovate Research.

Nevertheless, 45% were optimistic that the weak economy would improve soon while only 22% thought the economy was going downhill and that the domestic economy would worsen before it recovers.

Synovate’s survey, conducted two months ago, reviewed the spending habits and perceptions of Malaysians on the economy over six months to August. The survey was also done in Japan, Taiwan, Brazil, the US, France, Russia, Turkey and South Africa.

Synovate Malaysia managing director Steve Murphy said Malaysians had a more positive outlook on the economy compared to developed countries.

For example, almost two-thirds of Americans (63%), Japanese (63%) and French (64%) felt their economy would get worse before rebounding, he said after a media briefing yesterday.

“Malaysians’ optimism is merited as the banking system is regulated,” Murphy said.

Nonetheless, given the barrage of negative news over the last two months, more Malaysians could feel more pessimistic by now, he added.

In the six months to August, 36% of Malaysians were saving less, 25% investing less and generally reducing their spending on basic necessities and especially luxury items.

This was attributed to the lower disposable income given that food and energy prices had increased while salary saw little difference, Murphy said.

Almost half the respondents were earning almost the same as before, 26% were taking home less salary while 15% saw a pay rise during the six-month period.

Top of the list of items that Malaysians were willing to give up were holidays and leisure travel (18%), branded items (13%), eating out (12%) and purchases of big-ticket items (12%) like houses and cars.

Murphy said instead of getting a new car, the average Malaysian was more likely to consider a second-hand, or a lower range, vehicle.

Some 31% of Malaysians deemed to be affluent, i.e, those with monthly income of RM4,000 and above, indicated they had the intention to buy a new car in the next 12 months.

Affluent Malaysians have continued to invest this year with investment in unit trusts and mutual funds increasing to 40% in first half of the year from 29% a year ago.

Investments in residential and commercial property investment rose to 29% from 21% in the same period.

Murphy said the affluent believed that they would be cushioned during tough times.

“But this is a small segment of society. The majority of people would tighten their belts,” he added.

Synovate surveyed 1,000 respondents from urban and rural areas, as well as major cities in the country.

Meanwhile, Perusahaan Otomobil Kedua Sdn Bhd (Perodua) managing director Datuk Syed Hafiz Syed Abu Bakar said the automaker had yet to feel the change in consumer sentiment, as sales numbers for its economical vehicles remained strong for September and October.

“October hasn’t ended yet but about 15,000 (units) have been booked so far,” he told StarBiz in a telephone interview.

Mutiara Goodyear Development Bhd, which develops mostly mid-range properties, had seen a take-up rate of over 70% for its Prima Avenue commercial project in Petaling Jaya since the launch in mid-August, said chief executive officer Kee Cheng Teik.

Prima Avenue comprises two towers of office suites and retail lots selling at RM170,000 onwards with a total gross development value of RM120mil.

Buyers were mainly property investors and young entrepreneurs starting their business, he said.

But health food company Hai-O Enterprise Bhd is seeing weaker demand from its Chinese customers.

Financial controller Hew Von Kin said Chinese medicated halls, which got their supplies from Hai-O, were stocking less in anticipation of slower demand.